“Millions of Americans have put away money into their IRA throughout their professional life, which the government encourages with tax-deferred growth throughout the working years, allowing employees to accumulate more money faster – but there’s a catch,” says Marriage, CEO of Nature Coast Financial Advisors (www.naturecoastfinancial.com), which specializes in maximizing retirees’ finances. He is also responsible for Operation Veteran Aid, which benefits wartime veterans and their families.

That’s because by the time retirees reach the age of 70½, RMDs require individuals to make withdrawals, which are heavily taxed, he says. Marriage explains the process further with the theoretical example of John and Mary Smith:

• Smooth sailing … at first: By age 65, the couple has saved $500,000 in their IRA, and because they have been taking no income from it, they’re averaging a 6 percent return each year. They sail along smoothly, compounding the growth in the account and earn a return of $40,147 by age 70. But halfway through that year …

• Compounded tax liability: At 70½, John’s IRA has an accumulated value of $669,113. Therefore, his RMD – the amount he’s required to withdraw – is $24,420. John and Mary weren’t expecting the tax bill this creates, which, in their 25 percent tax bracket, is a staggering $6,105! More upsetting to the couple, however, is that this scenario will continue for the rest of their lives.

• Down the road: Fast forward to age 90 and the total withdrawals the couple have been forced to take reaches $908,005. The total taxes owed are a staggering $227,001 – which goes straight to Uncle Sam! Worse still, when John and Mary pass away, their children will pay taxes on the remaining money – likely at a much higher tax rate.

• The solution: Rather than wait for the inevitable RMD, John and Mary can convert to a Roth IRA. This entails taking their distributions early, at age 65, even though they are not required to do so. Each year for 10 years they withdraw $67,934, pay a tax bill of $16,983 from that sum and return the balance to the account. The net effect throughout the 10-year period is a total taxable distribution of $679,340 for a total tax bill of $169,835. The good news for John and Mary, however, is that they are now done paying taxes on this account, forever. They went from taxable distributions of $1.6 million to just $679,000, thus reducing the amount they owe on taxes by almost $1 million dollars! And the money that their beneficiaries receive will be tax-free.

“This scenario considers a number of variables, all of which are different for every client we work with,” Marriage says. “As a general rule, however, the sooner you begin the conversion process, the more you stand to gain.”

About Gary Marriage

Gary Marriage, Jr. is the founder and CEO of Nature Coast Financial Advisors, which educates retirees on how to protect their assets, increase their income, and reduce their taxes. Marriage is a national speaker, delivering solutions for pre-retirees, business owners and seniors on the areas affecting their retirement and estates. He is an approved member of the National Ethics Bureau, and is featured in “America’s Top Hometown Financial Advisors 2011.” Marriage is also the founder of Operation Veteran Aid, an advocate for war-time veterans and their families.

Rock Island, IL – Norma Rogers, 79, of Muscatine, recently donated her 1995 Cutlass Supreme and her motorized wheelchair to a veteran residing at Christian Care’s rescue mission in Rock Island. “Mom’s now in a retirement home, so she didn’t have any use for her car or the scooter anymore,” said Rogers’ daughter, Lynnette Burns of Muscatine.

“She just wanted to give them away—but she specifically wanted both to go to one veteran. That was very important to her.”

According to Burns, the car has only 105,000 miles on it and the wheelchair is only slightly used. She said it took about two months to find a veteran who could use both the car and wheelchair. “Who just gives away a car and scooter in this day and age?” asked Ernie D., the Navy veteran recipient who has been residing at Christian Care since February. “Something like this—it gives you a little perk in life. It (the donation) hasn’t caught up with me yet.”

Lynnette and her husband Brian contributed to an oil change and an antifreeze change, jumper cables, a water pump, tools, a small air compressor and a fire extinguisher for the vehicle. “Seeing us donate helps our daughters learn how to give back,” explained Lynette.

Christian Care is a 501(c)3 nonprofit organization operating two facilities—a domestic violence shelter for abused women and children and a rescue mission for homeless men. It serves homeless individuals, victims of domestic violence, veterans, men and women coming out of prison, and those with mental illnesses.

Its community meal site is open for breakfast, lunch and dinner on weekdays Monday through Friday, and for breakfast and dinner on Saturday and Sunday. Breakfast is served at 6:30 a.m., lunch at 12:15 p.m., and dinner at 6:30 p.m.

Anyone in need is encouraged to call Christian Care’s crisis hotline any hour of the day at (309) 788-2273 or visit online at christiancareqc.org.

Quad City Immigrants are getting their first hearing screenings this week…..thanks to Augustana students who are volunteering their time and expertise

(Rock Island, IL) According to Augustana College Assistant Professor, Ann Perreau the screenings taking place this Tuesday, Wednesday and Thursday is a win-win for all involved. The 64 immigrants attending “English as a Second Language” classes at Church of Peace in Rock Island will receive a vital service and the Augustana students will get some experience testing hearing.

Dr. Perreau says approximately 18 student volunteers will be assisting with the hearing screening. She says all of the students are Communication Sciences and Disorders majors, who will likely pursue careers as speech-language pathologists and audiologists. “We have a relatively new audiology program at the Augustana College Center for Speech, Language, and Hearing and we will be using several pieces of new equipment following funding we have received from local agencies over the past 1-2 years to conduct this screening”.

***The media is invited to the screenings for pictures and videos on Wednesday, May 15th at 10:00 am at the Church (1114 12th St. Rock Island). The students and organizers will be available for interviews***

The program is a cooperative effort among Black Hawk College, the Secretary of State, Rock Island School District, the Regional Office of Education Lights ON, Rock Island Library, and the Church of Peace.

The students are from many countries with the majority being from Myanmar (used to be called Burma), Iraq, and Africa (Burundi, Democratic Republic of the Congo, Tanzania).

Washington, D.C. – Congressman Dave Loebsack today called on President Obama to fully investigate the allegations that the Internal Revenue Service (IRS) illegally targeted non-profit organizations based on ideological criteria. He also called for the swift dismissal of anyone involved in the wrongdoing and anyone who had knowledge that it was happening and did not act to stop it. Yesterday, Loebsack wrote to the Acting Commissioner of the IRS calling for an investigation and today sent a letter to the President demanding action.

“I call upon the IRS to promptly conduct a thorough, independent investigation of these allegations. The agency needs to hold those responsible for this partisan discrimination fully accountable, including firing anyone who had knowledge that it was happening and did not act to stop it,” Loebsack wrote to Steven Miller, the Acting Commissioner of the IRS. “I respectfully call on you to see through an impartial, independent investigation of these allegations, and urge you to take appropriate actions to hold those responsible fully accountable.”

“I was incredibly shocked to read the reports that the Internal Revenue Service engaged in targeting of groups based on ideological criteria. It is unacceptable for the agency that we as a nation rely on to execute our tax code to be anything but completely neutral and nonpartisan,” Loebsack wrote to President Obama. “If it is found that these allegations are true, I urge the swift dismissal of those involved in the wrongdoing as well as anyone who knew what was happening and did not immediately act to fully investigate and disclose actions by IRS employees.”

The letter to Acting Commissioner Miller can be found here. The letter to President Obama can be found here.